Energy Bills.

[ThatFragranceGuy]

The government should be stepping in to make sure everyone can heat their homes without sacrificing other necessities. How they do that with caps or monthly credits for poor families doesn't really matter. You are, of course, right about years of profit and the energy suppliers should foot the bill for any measures. I don't really mind how it is funded, so long as nobody goes cold this winter.

Most energy suppliers have been losing money for years hence why so many been closing down last few years, it's not just this year, although this has been the biggest by far, but if you look at lists of energy suppliers closing in 2017, 2018, 2019 & 2020 it's a lot every year so the warning signs were there. Look at Npower, they were massive and couldn't find a way to stay profitable

Energy prices have been a race to the bottom for some time, with people wanting the cheapest deal and to be protected from overcharging, the trouble is those customers on expensive SVR's protected the rest of the customer base. Comps no way like bulb have lost money hand over fist to build a customer base only to have this come along and totally screw them up, too. They used to pay people £50 to refer people, and give that new customer £50 too. Plus pay peoples exit fees up to £60 per fuel, so that is a lot of costs; also sites like uswitch and compare the market get hefty broker kickbacks for each customer they send the suppliers way, so it's not just the cost of energy the supplier has to pay for, it's the cost of acquiring the customer and the cost of servicing the account. Things were already bad before wholesale prices spiked several hundred percent and although they hedge, that only covers them a short period of time usually, so many customers are on "cheap" fixed deals into next year, which costs them massively when it comes to buying new units especially as demand is higher due to more people being at home.

However consumers have benefitted from cheap deals for many years now as a result of easy switching and comparison sites, cashback etc. previously you were a bit mental if you were paying the price cap because so much choice out there.

At least consumers have price caps, commercial customers have no such luxury

 

[Laughing]

Most energy suppliers have been losing money for years hence why so many been closing down last few years, it's not just this year, although this has been the biggest by far, but if you look at lists of energy suppliers closing in 2017, 2018, 2019 & 2020 it's a lot every year so the warning signs were there. Look at Npower, they were massive and couldn't find a way to stay profitable

Energy prices have been a race to the bottom for some time, with people wanting the cheapest deal and to be protected from overcharging, the trouble is those customers on expensive SVR's protected the rest of the customer base. Comps no way like bulb have lost money hand over fist to build a customer base only to have this come along and totally screw them up, too. They used to pay people £50 to refer people, and give that new customer £50 too. Plus pay peoples exit fees up to £60 per fuel, so that is a lot of costs; also sites like uswitch and compare the market get hefty broker kickbacks for each customer they send the suppliers way, so it's not just the cost of energy the supplier has to pay for, it's the cost of acquiring the customer and the cost of servicing the account. Things were already bad before wholesale prices spiked several hundred percent and although they hedge, that only covers them a short period of time usually, so many customers are on "cheap" fixed deals into next year, which costs them massively when it comes to buying new units especially as demand is higher due to more people being at home.

However consumers have benefitted from cheap deals for many years now as a result of easy switching and comparison sites, cashback etc. previously you were a bit mental if you were paying the price cap because so much choice out there.

At least consumers have price caps, commercial customers have no such luxury

I take your point about suppliers going bust even before this year. I don't know enough about the industry to know if some suppliers are making billions in profit and the ones going bust were just badly run.

In any event, my main point was always that we need to do whatever is necessary to feed and heat the most vulnerable. Whatever that may cost.

 

[Chris_Boro]

I take your point about suppliers going bust even before this year. I don't know enough about the industry to know if some suppliers are making billions in profit and the ones going bust were just badly run.

In any event, my main point was always that we need to do whatever is necessary to feed and heat the most vulnerable. Whatever that may cost.

Those that gone bust have done so as their business relied way too much on the just in time purchasing modal of wholesale gas and electric remaining stable.

As soon as the prices sored it out paced the selling price of the product they already bought and instantly made a huge loss that smaller suppliers could not absorb to be able to buy more at the higher price.

As you say, be it the government, the big suppliers or a mix of both much much more must be done to prevent millions slipping into the choice between food or heat. Its a disgraceful position the 5th richest nation to be in.

 

[ThatFragranceGuy]

Those that gone bust have done so as their business relied way too much on the just in time purchasing modal of wholesale gas and electric remaining stable.

As soon as the prices sored it out paced the selling price of the product they already bought and instantly made a huge loss that smaller suppliers could not absorb to be able to buy more at the higher price.

As you say, be it the government, the big suppliers or a mix of both much much more must be done to prevent millions slipping into the choice between food or heat. Its a disgraceful position the 5th richest nation to be in.

I don't think that is true. Npower didn't rely on that, neither did many of the other ones that go bust. It's just very difficult to make a profit. Price cap made that even harder when it came in, and pretty much killed off npower.

what do you think the government can do? There's about 25 million households in the uk. If they have everyone £400 to cover the difference that would be £10,000,000,000 and how long would that last? Would it resolve the issue or just drive usage up because of the credit?

Data portal

Access a range of interactive data charts on the gas and electricity sectors in Great Britain.

www.ofgem.gov.uk

This gives a breakdown of what peoples bills pay for. Companies making profits are usually doing it on other ways eg British Gas is part of centrica and has a lot of fingers in pies eg boiler cover, installations etc and obviously well known for being extortionate, and some are involved in energy generation. Even when times were good, margins were often about 4% profit

 

[NYboro]

This gives a breakdown of what peoples bills pay for. Companies making profits are usually doing it on other ways eg British Gas is part of centrica and has a lot of fingers in pies eg boiler cover, installations etc and obviously well known for being extortionate, and some are involved in energy generation. Even when times were good, margins were often about 4% profit

"Profit" should never be a part of energy supply or any other public utility for that matter.

 

[Laughing]

I don't think that is true. Npower didn't rely on that, neither did many of the other ones that go bust. It's just very difficult to make a profit. Price cap made that even harder when it came in, and pretty much killed off npower.

what do you think the government can do? There's about 25 million households in the uk. If they have everyone £400 to cover the difference that would be £10,000,000,000 and how long would that last? Would it resolve the issue or just drive usage up because of the credit?

Data portal

Access a range of interactive data charts on the gas and electricity sectors in Great Britain.

www.ofgem.gov.uk

This gives a breakdown of what peoples bills pay for. Companies making profits are usually doing it on other ways eg British Gas is part of centrica and has a lot of fingers in pies eg boiler cover, installations etc and obviously well known for being extortionate, and some are involved in energy generation. Even when times were good, margins were often about 4% profit

I don't think they need to give credits to every household. I will be fine as will lots of households. I have no problem with being taxed a bit more so people don't freeze or starve, or indeed both.

 

[BillyBoyStu]

No Household should go cold in the winter.
Every household should have an allowance of cheap energy sufficient to keep the house warm and power the necessary devices.
Anything over that usage should be then be charged double.
If people can afford it and want to heat/power their 5 bedroom detached houses with Spin Dryers, Dish Washers, TVs in every room, Windows open with the heating on full power and people wearing shorts and t-shirts in the house with Blackpool illuminations outside then that would be their choice.

 

[BaronSmoggie]

I just got a BG notification to switch to a new fixed price tariff.



Left is my current tariff and the right is their proposed new for Gas and Electricity. Now I expected the cost per unit to go up because of the cost of gas, but the standing charges have effectively doubled. Now where's the justification for that?

 

[ThatFragranceGuy]

Suppliers will have different tariffs with different unit rates and standing charges. Standing charge is meant to represent cost of transporting and infrastructure, but in practice it just depends which combination works best for you. Some tariffs don't (or didn't) have them. People with low consumption benefit from lower standing charge cost deals with higher unit costs eg holiday homes, people with higher consumption benefit from the other way round; but both are levers the energy firms pull to arrive at the total tariff cost

bad idea to move to a fixed tariff right now anyway

 

[ThatFragranceGuy]

No Household should go cold in the winter.
Every household should have an allowance of cheap energy sufficient to keep the house warm and power the necessary devices.
Anything over that usage should be then be charged double.
If people can afford it and want to heat/power their 5 bedroom detached houses with Spin Dryers, Dish Washers, TVs in every room, Windows open with the heating on full power and people wearing shorts and t-shirts in the house with Blackpool illuminations outside then that would be their choice.

Is there an example of a country that is able to do such a system successfully? That sounds like it would be hugely expensive for the state to run. Seems pretty stacked against the poor to be basically trapped into a dull existence while the "haves" can go wild without worry as they can afford it

 

[Chris_Boro]

I don't think that is true. Npower didn't rely on that, neither did many of the other ones that go bust. It's just very difficult to make a profit. Price cap made that even harder when it came in, and pretty much killed off npower.

what do you think the government can do? There's about 25 million households in the uk. If they have everyone £400 to cover the difference that would be £10,000,000,000 and how long would that last? Would it resolve the issue or just drive usage up because of the credit?

Data portal

Access a range of interactive data charts on the gas and electricity sectors in Great Britain.

www.ofgem.gov.uk

This gives a breakdown of what peoples bills pay for. Companies making profits are usually doing it on other ways eg British Gas is part of centrica and has a lot of fingers in pies eg boiler cover, installations etc and obviously well known for being extortionate, and some are involved in energy generation. Even when times were good, margins were often about 4% profit

That's exactly how they went bust, they could no longer support their own pricing which was based on when they bought the product and forecasting of future prices/demand.

Their obligations to fixed rate customers meant they had to start buying at a loss as they have no stocked product which is the just in time method, this made their business untenable.

It's this switch that has meant all the gas storage tanks being decommissioned. Again, short sighted in thinking nothing like this would happen.

It will cost billions to help the poorest people stay warm and that cost should be irrelevant to the obligations our government has in ensuring it's citizens have a warm home and fuel to cook.

Energy companies over the past 20 years have made billions out of customers by making billing confusing and troublesome to switch, milking those who were on overpriced standard tariffs who didn't know any better. Now the shoe is on the other foot, it's to poorest who will suffer from their mismanagement and that cannot be allowed to happen.

 

[BillyBoyStu]

Is there an example of a country that is able to do such a system successfully? That sounds like it would be hugely expensive for the state to run. Seems pretty stacked against the poor to be basically trapped into a dull existence while the "haves" can go wild without worry as they can afford it

No example, it was just an idea to allow everyone what ever their standard of living to not go cold in the Winter.

I tried to think of an idea where the "Haves" would subsidise the "Have nots".
The Haves can go wild any way they like but if it was to help the Have Nots then whats to be negative about?

Depends how you define a Dull existence?

 

[Sulamani]

Is there an example of a country that is able to do such a system successfully? That sounds like it would be hugely expensive for the state to run. Seems pretty stacked against the poor to be basically trapped into a dull existence while the "haves" can go wild without worry as they can afford it

That’s literally what already happens in every facet of existence under capitalism.

 

[BaronSmoggie]

Suppliers will have different tariffs with different unit rates and standing charges. Standing charge is meant to represent cost of transporting and infrastructure, but in practice it just depends which combination works best for you. Some tariffs don't (or didn't) have them. People with low consumption benefit from lower standing charge cost deals with higher unit costs eg holiday homes, people with higher consumption benefit from the other way round; but both are levers the energy firms pull to arrive at the total tariff cost

bad idea to move to a fixed tariff right now anyway

I don't intend on moving right now, but I bet this tariff won't be available in February, a higher one will be. I'll have to hedge my bets and see, but I'm not paying both a double standing charge and a doubling of my per unit price.

 

[ThatFragranceGuy]

I don't intend on moving right now, but I bet this tariff won't be available in February, a higher one will be. I'll have to hedge my bets and see, but I'm not paying both a double standing charge and a doubling of my per unit price.

If you look at what a fixed rate is now compared to the price cap, imagine what the fixed will be in feb. You'll overlay between now and then if you fixed beforehand, and price cap in feb (takes effect April) will still be lower than fixed rates now

so it'll go up for you but better then locking in now, basically

 

[ThatFragranceGuy]

That’s literally what already happens in every facet of existence under capitalism.

So we make it more like that except double the cost onto the poor? How does that help?

 

[ThatFragranceGuy]

No example, it was just an idea to allow everyone what ever their standard of living to not go cold in the Winter.

I tried to think of an idea where the "Haves" would subsidise the "Have nots".
The Haves can go wild any way they like but if it was to help the Have Nots then whats to be negative about?

Depends how you define a Dull existence?

Well anything over and above the bare necessities anyone on a low income would be punished for using entertainment devices, tax on having kids, have to huddle round the "family tv", nor have an EV, can't have Christmas lights on and so forth because not deemed necessary usage, whereras those with good incomes can do whatever they like as they can afford the premium easily. It's up to people to define what makes their life less dull, not you and I. We may agree with it or disagree with it but it does either way.

 

[Sulamani]

So we make it more like that except double the cost onto the poor? How does that help?

The guy was saying that every house gets x amount of energy at a base price an the cost per unit rises as your usage goes up. Poor people use less energy as they have less stuff and smaller houses. So the necessities of keeping your family warm would be cheaper than say a home solarium or mining for cryptocurrency. How exactly is it doubling the cost for the poor?

 

[Sulamani]

Well anything over and above the bare necessities anyone on a low income would be punished for using entertainment devices, tax on having kids, have to huddle round the "family tv", nor have an EV, can't have Christmas lights on and so forth because not deemed necessary usage, whereras those with good incomes can do whatever they like as they can afford the premium easily. It's up to people to define what makes their life less dull, not you and I. We may agree with it or disagree with it but it does either way.

They won't be able to have any of those things soon anyway because of energy costs. We need poor people to pay less and rich people to pay more.

 

[thewanderer]

The guy was saying that every house gets x amount of energy at a base price an the cost per unit rises as your usage goes up. Poor people use less energy as they have less stuff and smaller houses. So the necessities of keeping your family warm would be cheaper than say a home solarium or mining for cryptocurrency. How exactly is it doubling the cost for the poor?

They're getting an even better deal now. The cost is capped!